by R. Sasankan.
The
word “lobby” has a hugely negative connotation in India, unlike the US
where it is an entrenched part of the system to encourage public
discourse on a variety of complex, and sometime contentious, topics.
Lobbies have no substantive place in the Indian and they usually work
within the dark corners of the vast labyrinth of India’s governance
system, often working at odds with the wider interests of the country.
Until recently, India’s petroleum sector had a very powerful truck lobby
that stymied the growth of a robust pipeline network to transport
petroleum products within the country. Transportation by road resulted
in huge transportation losses including theft. Nevertheless, the oil
companies preferred to go slow in laying pipelines obviously under the
influence of the truck lobby which has the backing of some very powerful
people. What the oil companies have accomplished now could have been
achieved 30-40 years ago. The only thing that was lacking was the
political will.
The
Indian government has been subsidising kerosene as it is the fuel of
the poor people. But there was a terrible flip side: it fostered a
massive racket, resulting from the diversion of a significant portion of
subsidised kerosene supplies to petroleum retail outlets where it was
used to adulterate diesel. A sizeable number of retail petroleum outlets
are owned and operated by politicians who always speak about the need
to champion the cause of the weaker sections of the society and the need
to subsidise the fuel they consume. It took decades for the government
to devise a mechanism to reach the subsidy directly to the
beneficiaries.
I pointed out these instances to substantiate my argument that India is a
highly fertile place for lobbies to operate. It takes time for the
government machinery and the political leadership to wake up and act. By
the time they do so, a colossal damage has already been done.
Obviously, these are international players who operate through Indian
agents, some of whom have always been a part of India’s powerful
bureaucracy and the top managements of the state-owned companies.
India
has gas-rich neighbours but no transnational gas pipeline to access the
gas. In comparison, China gets huge quantities of gas through such
pipelines. The whole of Europe does so as well. India has always been
tantalized by such offers but nothing has ever materialised. Who could
have scuttled such an eminently sensible idea? Could this be the
handiwork of lobbies working within or outside the country?
The first such offer came from Iran, India’s neighbour which is reckoned
to have the second-largest gas reserves in the world after Qatar. The
offer came in the 1990s well before India opted to source LNG from Qatar
under a deal signed in 1998. True, Iran had tilted in favour of
Pakistan during the wars that India had fought with that country in 1965
and 1971. So did almost all Islamic countries except Iraq. Did India
seriously examine the Iranian offer or simply dismiss it out of hand?
Later, there was another proposal for an Iran-Pakistan-India (IPI)
pipeline. Pakistan cannot be a dependable market for Iran as its ability
to pay for the gas is in the realm of speculation. India, however, is a
huge market that any gas supplier would love to have access to.
The
IPI pipeline has not yet been formally dismissed by the Indian
authorities but has been in cold storage on security concerns. Some of
these concerns are genuine: India cannot be expected to readily agree to
a pipeline traversing a terrorist-infested state like Pakistan. But why
not examine the option of Iran, the supplier, taking the full
responsibility of delivering gas to India’s borders? There could be
other options as well.
So, a legitimate question arises: how could India readily agree to the
ADB-sponsored Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas
pipeline? This pipeline too has to reach India through Pakistan. It is
obvious that some forces within and outside the country are opposed to
Iranian gas reaching India. The Indian authorities did not raise the
same security concerns when Reliance Industries and Essar decided to set
up 80 million tonnes per annum of crude refining capacity at locations
close to the India-Pak border in the state of Gujarat. The investment in
these refineries is huge and any damage to these facilities could have
been a far greater security threat to the country’s energy security.
The United States obviously will not be happy with a pipeline emanating
from Iran and that is perfectly understandable. But is the US the main
stumbling block or is it the LNG lobby operating within the country? The
LNG lobby had penetrated the Indian bureaucracy long ago and the
subversion of certain provisions in the contract with RasGas of Qatar
for the supply of 7.5 million ton per annum of LNG happened with its
full knowledge. Remember, the energy wing of the erstwhile Planning
Commission circulated a questionnaire to find out the steps taken by
various ministries to promote the use of LNG. But there was not a single
query on measures to increase domestic gas production.
Gas through transnational pipelines should work out cheap. This is
precisely the benefit that Indian consumers are being denied. At a time
when the world is facing an LNG glut, it is a little perverse that India
buys LNG at a price that is $ 1-1.5 /mmbtu above the spot rate. Now
that a few regasification terminals are coming up both on the west and
east coasts of the country, a new LNG terminal lobby will emerge and it
will seek to run down the idea of transnational pipelines. They could
emerge as a powerful force in the energy market.
A considerable study has already been made on an offshore pipeline to
bring gas from the Middle East. This is considered an eminently sensible
project. Russia is swapping gas with Iran to minimise transportation
costs. Russia is desperate to penetrate the Indian market. The Essar
refinery, which is being acquired by Rosneft, may not only double the
refining capacity but also set up a petrochemical complex for which it
will need gas. The swapped Iran gas can reach the complex provided there
is a pipeline. If the Indian gas consumer is going to benefit from
cheaply-priced gas in the not-too-distant a future, it should be on
account of Vladimir Putin’s aggressive marketing strategy.
The gas producers are targeting the Indian market. Those who are already
in do not want to let others enter the country. There is nothing
unusual about this. India’s energy pundits, the ministry of petroleum
and natural gas, and the gas consumers should jointly work out a
strategy to derive the maximum benefit out of the unprecedented
competition among gas producers. This is the right time for India to
obtain gas at a competitive rate. The scope of domestic gas production
going up significantly looks dim. The LNG lobby should not be allowed to
swallow the energy market. It should be countered with competition from
transnational pipelines. The country needs a mix of both.
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